These zombies are killing the British economy

As Coalition politicians bleat on about the need to “rebalance the British economy” and grow manufacturing exports, they forget one thing – we hardly have any manufacturing any more. Manufacturing only makes up about 10% of GDP. So even if there was an improbable 20% increase in manufacturing exports, this would increase GDP by just 2%. That’s not going to create many jobs or do anything to solve the Government’s spiralling level of debt.

The problem is that the British elites have always despised manufacturing and business in general. Rather than try to grow businesses, the British elites have just seen them as ways to get rich quickly. In the 60s and 70s, asset-stripping was widespread. Financial manipulators would buy up companies and then sell off the bits making themselves billionaires in the process while often destroying  jobs and wrecking once healthy businesses.

Today we have a new form of asset-stripping – zombification. Financial manipulators take huge loans to buy up companies with good cash flows. They then pay themselves hundreds of millions in dividends while loading massive debts on the companies they have bought. This means all the money made by the companies goes to repaying debt leaving little to nothing for investment or growth. It also conveniently means these companies pay little to no corporation tax as interest payments on debt wipe out any profits. That’s why these companies are called “zombies”- they are neither alive nor dead, but stumble on lifelessly making their owners and bankers rich.

Most of our water companies are zombies. When they were privatised in 1989, water companies had 20% debts. Now it is over 80%. Yet their usually foreign owners have pulled out billions in dividends from overcharging their customers. Most of the companies owning nursing homes are zombies. Again, their owners have loaded them with debt while paying themselves hundreds of millions in dividends. Saga is a zombie. The AA is a zombie. Birds Eye, Thomas Cook, Fitness First, Punch Taverns, Travel Lodge, BAA (owners of zombie airport Heathrow) are all zombies. In fact a report by accountants PwC estimated that there were 150,000 zombie companies in Britain.

This zombification is destroying British companies and British jobs – but it is making these companies’ owners very very rich.